But not everything was rosy. As of this month, 5.2 percent of mortgages, or 2.7 million, are in forbearance, according to Black Knight, a mortgage data and technology company. That represents $547 billion in unpaid principal.

Many experts are predicting another strong housing market in 2021. They are forecasting increased demand from buyers who delayed purchasing homes because of the pandemic; from existing homeowners who need larger spaces to accommodate parents working from home and children attending school virtually; and from condo owners who are seeking to escape multifamily buildings for single-family houses to mitigate exposure to the virus. The ability to tour homes and close on purchases virtually will make buying a home simpler in 2021.

But first-time buyers are likely to face head winds in 2021. Buyers need more money than ever before to buy a home. According to the National Association of Realtors, the median household income of first-time buyers in 2020 was $80,000, up from $68,703 in 2019. The median household income of repeat buyers was $106,700.

Affordability worsened in much of the United States in the fourth quarter of last year as median home prices were up at least 10 percent in most of the nation, according to a report by Attom Data Solutions. The report found that 275 of 499, or 55 percent, of the counties it analyzed were less affordable in the fourth quarter of 2020 than past averages. That’s up from 217 in the fourth quarter of 2019 and 164 in the fourth quarter of 2017.

Here’s a look at what the housing experts expect in 2021.

National Association of Realtors

Home sales set a number of records last year despite — and in some cases, because of — the coronavirus pandemic. Although the final data for 2020 has not been released, the trade association for real estate agents expects new-home sales to come in 20 percent higher and existing-home sales to come in 3 percent higher than in 2019. NAR chief economist Lawrence Yun predicts new-home sales will jump 21 percent and existing-home sales will climb 9 percent in 2021. He predicts home prices will rise by 3 percent in 2021.

“The consequent rise in home prices have boosted wealth accumulation for homeowners,” Yun said. “But the opposite side of this will mean the continued decline of housing affordability and will limit future homeownership opportunities for young adults if housing supply is not greatly increased.”

Yun says mortgage rates will rise to 3.1 percent in 2021.

“The Biden presidency could bring several impactful changes to the housing market,” Yun said. “The home buyer tax credit he proposed as a candidate would help Americans cover their down payment costs and is likely firmer assurance of government guarantees to mortgages backed by Fannie Mae and Freddie Mac. In addition, new appointees at the Federal Reserve are likely to pursue an expansionary monetary policy for a longer period, which should keep interest rates stable over the next few years.”

NAR identified 10 markets that have shown resilience during the pandemic and which should perform well in a post-pandemic environment: Atlanta; Boise, Idaho; Charleston, S.C.; Dallas-Fort Worth; Des Moines; Indianapolis; Madison, Wis.; Phoenix; Provo, Utah; and Spokane, Wash.


The real estate listings website predicts 2021 will be a robust sellers’ market as home prices hit new highs and buyer competition remains strong. Inventory is expected to make a slow but steady comeback, which will give buyers some relief. However, increasing mortgage rates and prices will make affordability a challenge throughout the year.

“The 2021 housing market will be much more ‘normal’ than the wild swings we saw in 2020,” said Danielle Hale, chief economist at Realtor.com. “Buyers may finally have a better selection of homes to choose from later in the year but will face a renewed challenge of affordability as prices stay high and mortgage rates rise.”

Home prices could reach new highs in 2021, climbing by 5.7 percent, as growth continues but at a slower pace. The number of homes for sale will slowly rebound, offering buyers some relief. The number of homes for sale in the United States reached an all-time low in December, dipping below 700,000 for the first time.

Realtor.com expects existing-home sales to rise 7 percent and single-family housing starts, which are new residential construction projects that are just getting underway, to grow by 9 percent. Mortgage rates will steadily move higher, reaching 3.4 percent by year’s end.

Realtor.com also selected 10 markets where it expects to see the strongest home price and sales growth in 2021. They are: Sacramento; San Jose; Charlotte; Boise, Idaho; Seattle; Phoenix; Harrisburg, Pa.; Oxnard, Calif.; Denver and Riverside, Calif.


The online real estate brokerage predicts the housing market will remain strong through 2021 as the economy recovers from the pandemic. In early 2021, Redfin chief economist Daryl Fairweather predicts home buyers will remain undeterred by its effects, eager to take advantage of sub-3 percent mortgage rates while they last. She says: “Later in the year, the worst of the pandemic will hopefully be behind us, and as businesses reopen and daily activities become safer, a new batch of homebuyers and sellers will enter the housing market, making for the strongest year of home sales since 2006.”

Annual home sales growth will increase from 5 percent in 2020 to more than 10 percent in 2021. Fairweather expects “more new listings to make for a more balanced market and more home sales.” New listings declined 3 percent in 2020 from the previous year, but in 2021 Redfin expects new listings to grow by more than 5 percent. The increase in new listings combined with slowly rising mortgage rates will soften price growth to under 5 percent in 2021, down from 6 percent in 2020.

Although mortgage rates will remain low primarily due to a sluggish global economic recovery, Fairweather sees them moving higher, to around 3 percent.

Fairweather anticipates more new homes will be built in 2021 than in any year since 2006. In 2021, the landscape for home builders will be even more favorable. Rising prices for existing homes will drive more buyers to consider new-built homes. And because home buyers are now more eager to buy in suburban and rural areas thanks to cheaper land, there will be more areas where homes can be built profitably.

By the end of the year, Redfin predicts the homeownership rate will rise above 69 percent for the first time since 2005.


The online home sale marketing company expects 2021 will be “a year unlike any other as the housing market responds to the challenges and changing preferences that emerged in 2020.” Zillow expects demand to remain high and to surge in cities as economies reopen. It predicts annual home sales growth will be the highest in almost 40 years as “financial certainty brings more sellers into the market to meet the heavy demand and technology allows for faster connections with interested buyers.” Even so, rising home prices, mortgage rates and rents will bring affordability challenges.

Zillow forecasts 21.9 percent annual growth in home sales for a total of almost 6.9 million homes sold, which would be the biggest annual sales growth since 1983. It said “home price appreciation will reach its fastest pace since the Great Recession, as the inventory crunch continues to pit buyers against each other, competing for a scarce number of homes for sale.” Zillow predicts home price appreciation to exceed 10 percent in 2021.

Zillow foresees a perfect storm of market conditions that will “create the hottest spring shopping season in recent memory, with sales happening quickly and often above list price.” Many prospective homeowners will become more certain about whether their jobs will be performed remotely long term, which could add buyers to the market who had been waiting for that question to be settled. Rising mortgage rates could also add to the buyer frenzy. Zillow predicts that “although dense, urban living got a bad rap” last year because of the pandemic, “city living will almost certainly enjoy a renaissance in 2021.”

National Association of Home Builders

Residential construction was a bright spot for the economy in 2020. After an initial decline in builder confidence and construction activity in March and April, the outlook for building improved considerably.

The NAHB/Wells Fargo Housing Market Index, a monthly survey that gauges builder perceptions of single-family home sales and sales expectations for the next six months, came in at 86 out of 100 in December, down slightly from the highest reading recorded, 90, in November. The index started 2019 at 58.

Home builders reported ongoing strong levels of buyer traffic, yet cited supply-side concerns related to material costs and delivery times. Availability of land and lots was also reported as a challenge. For 2020 as a whole, single-family starts were up almost 11 percent over the 2019 total. Remodeling was strong across all of 2020. The primary drivers of gains in 2020 were low interest rates and a renewed focus on the importance of housing during the pandemic.

For 2021, NAHB expects ongoing growth for single-family construction. It will be the first year for which total single-family construction will exceed 1 million starts since the Great Recession, a 2.5 percent gain over the final 2020 total of 884,000. Starts will be up more than sales in percentage terms, because builders need to catch up with the sales undertaken in 2020.

Growth is expected because inventory of both new and existing homes remains low. There is only 4.1 months’ supply of new homes available, with five to six months considered balanced.

The shift in the geography of demand was a key dynamic for housing in 2020. Buyers wanted more space, and the increase in telecommuting allowed buyers and renters to drive farther from urban cores to attain more affordable housing. The NAHB Home Building Geographic Index indicates construction of single-family and multifamily housing was growing significantly faster in the suburbs and exurbs, particularly in medium-sized cities. Some of this effect will roll back after the mass deployment of a vaccine, but NAHB expects a large number of workers to have more flexible schedules relative to the pre-pandemic period, leaving a persistent effect that favors housing demand in more affordable markets in outlying areas.

Remodeling should see additional gains in 2021 as homeowners continue to improve their homes, particularly with work-from-home opportunities in mind.

American Enterprise Institute

Edward Pinto, director of the conservative think tank’s Housing Center, says the supply of new homes in 2021 will continue to be severely constrained. Existing supply is at a record-low level of 2.3 months, where six months is considered a market that is in balance. New construction is down to 3.5 months.

“This imbalance has been fueled by the work-from-home phenomenon, the millennial generation becoming home buyers, … second-home demand due to the pandemic and then of course low rates are leading to increased demand,” he said. “We see that this will continue for some time. It’s very difficult to replenish or add to supply. Existing homeowners in many cases are staying put, particularly the ones that are older.”

Low inventory and low mortgage rates have led to high house price appreciation. Pinto is seeing house price appreciation at 10.3 percent and expects that to continue in 2021. He also predicts that 2021 home sales will continue at or above their 2020 levels and that this will be a near-record mortgage origination year.

Pinto expects the Biden administration to reprise the actions Mel Watt took during his stint as the Federal Housing Finance Agency director, namely, keeping Fannie Mae and Freddie Mac in conservatorship.

“We also will see a push for Congress to pass first-time buyer down-payment assistance on 30-year loans, which we think would be a terrible policy decision as those subsidies would just get capitalized and [lead to] even higher prices,” he said.

He anticipates an expansion of the low-income housing tax credit as well as housing vouchers being made an entitlement.

Mortgage Bankers Association

With robust demand for refinancing and home purchases through the end of 2020, the trade association for the real estate finance industry forecast mortgage originations to close out 2020 at more than $3.6 trillion — the most since 2003’s $3.8 trillion.

“Our market truly has been one of the very few bright spots of the economic recovery,” said Mike Fratantoni, MBA chief economist. “Millions of homeowners have saved money through refinancing, mortgage servicers have helped over 5 million homeowners stay in their home by offering forbearance, and following a sudden halt in the spring, home sales are booming.”

But the high volume is not expected to continue into 2021. MBA predicts mortgage originations to fall to $2.8 trillion this year. It is expecting mortgage rates to rise to 3.2 percent by the end of the year.

MBA anticipates sales of existing homes to reach 6.3 million and new-home sales to grow to 989,000. Housing starts will rise to 1.1 million and prices will increase by 5.1 percent.


Greg McBride, Bankrate.com’s chief financial analyst, expects rates to end 2021 at 3.1 percent — but he says there could be dramatic swings throughout the year.

“It will be an especially volatile year for mortgage rates, with fixed rates falling to even lower lows early in 2021 on economic concerns but rebounding in the back half of the year as widespread vaccinations lead to a surprisingly strong surge of economic activity — and the inflation worries that come with it,” he said.